Despite being the world’s second largest continent, Africa has long been treated as the forgotten region by international businesses. Decades of political instability, civil unrest and crushing poverty have made it risky for investors and unappealing to global brands. But a revelation is taking place.
According to the International Monetary Fund (IMF), Africa will have the world’s fastest-growing economy during the next five years of any continent. During 2012, six of the top ten fastest growing economies in the world have been African; Libya, Niger, Angola, Liberia, Ghana and Sierra Leone. The last in that pack is leading the charge with an eye-boggling 51.4% swell of gross domestic product (GDP) this year and a number of other frontier African economies are projected to show double-digit compound annual growth (CAGR).
Africa is currently enjoying its longest income boom for 30 years and over the past decade, its manufacturing output has doubled. Fresh discoveries of gas and oil deposits have been unearthed and new natural resources are springing up across the continent. GDP on average across the continent has averaged 5% annually over the past ten years. While Europe and America have been focusing on preventing their own economies from collapsing around them, Africa’s has stealthily crept up on their coattails.
Africa has also shifted its commercial interests away from those struggling with the global financial meltdown in the direction of Asia. China, in particular, has been eager for the raw materials such as copper and cobalt that Africa has in abundance and with cash to burn, they have invested heavily.
Similar agreements with India, Brazil, Korea and Turkey have effected a rapid improvement in the continents mines, roads, railways, hospitals and schools and has plunged them headfirst into 21st century standards. These lucrative multi-billion dollar packages are changing the face of the African landscape and giving their infrastructure a vital renovation.
The international demand for Africa’s natural resources has gifted it some considerable bargaining muscle. With potential buyers falling over themselves to get the best deals from an untapped market, Africa can cherry pick some of the best incentives being dangled in front of them including shared management skills, technology and up-front payments.
Other factors contributing to Africa’s economic growth include collective African governments getting a handle on armed conflicts, cutting foreign debt, shrinking national budget deficits, substantially slowing inflation rates and improving and reforming macroeconomic conditions. The halt to deadly hostilities has created political stability giving renewed confidence for foreign investment and improved conditions for growth. There are even rumours that Nairobi will table a bid to host the 2024 Olympics, something that would have been considered outrageous only a few years ago.
Despite this surge, Africa remains the world’s poorest continent. Even South Africa, the continent’s wealthiest country, still suffers from the undesirable statistic of a quarter of its population unemployed and stories of corruption are never far from the front pages. Even so, there is no doubt that the Africa of old is gone and a new Africa is emerging.